Internet has added a new dimension in international business - not
just in marketing or product promotion, but in other areas also
- like payment processing. As an Internet savvy export import professional
- you now enjoy more options to pay or collect payment from overseas
We review here all payment options - traditional and new ones, with
emphasis on new payment options like escrow, paypal, credit card
As an exporter, you should review the new options and adapt yourself
accordingly as your buyers from more advanced countries may demand
new payment options for convenience and ease of use. Failure to
adapt yourself means loss of potential customers and gifting an
edge to your technologically advanced competitors at home or abroad.
The basic structure of Internet-based new payment systems remains
same as that of traditional ones, i.e. buyer <=> intermediary <=>
seller. However, as you will see in this article, the role of intermediary
has undergone sea change to adapt itself to special requirements
of on-line environment.
Role of Intermediary in International Payment
A reliable intermediary is essential for any secure payment system
- specially so when buyer and seller are from different countries
- separated by thousands of miles.
Traditionally, banks have played this role of reliable intermediary.
Though they still are the most important intermediary in International
business - new entities are entering the intermediary field.
Apart from establishing its credibility as neutral referee - the
intermediary, in on-line environment, has to ensure safe and secure
transaction. As a result, technology plays a very important role
for this new generation intermediaries.
Methods of Payment
Buyer's comfort is an essential pre-condition for any international
transaction. The buyer has to be satisfied that ordered products
have been delivered before payment is released. The intermediary
has to safeguard interests of both buyer and seller.
Most export sales agreements stipulate, in some manner, that certain
collection documents must be submitted in advance by the exporter
to the buyer or its bank in order to generate payment once the goods
have been received. The main documents include commercial invoices
(the exporter's bill of sale), consular invoices (required by some
foreign countries), certificates of origin (attesting to the origin
of the exported goods), import licences (some countries require
importers to obtain these), inspection certificates (health or sanitary
certificates are required by many countries for animals, animal
products, plants, and other agricultural products), and dock and
Payment Options in International Business
Letter of Credit (L/c)
Payment in Advance with Order
Payment Prior to Shipment / Partial Payment
D/A (Delivery against Acceptance)
Funds Collection via Banks
Wire Transfer / TT (Telegraphic Transfer)
M/T (Mail Transfer) Bank Draft / Cashier's
Open Account Credit
Goods Shipped "On Consignment
Counter trade (Barter, Counter purchase
and Offset) etc.
Happy and Safe Surfing
Dr. Amit K Chatterjee
- Newsletter on Business Opportunties from India and Abroad
Vol: 4, Issue 20
; Jan 15' 2004
Dr. Amit K. Chatterjee
(Amit worked in blue-chip Indian and MNCs for 15 years in various
capacities like Research and Information Analysis, Market Development,
MIS, R&D Information Systems etc. before starting his e-commerce
venture in 1997. The views expressed in this columns are of
his own. He may be reached at email@example.com